Stanford's swindled victims want his political donations

Convicted financier has given millions to GOP, Democrats

By Emily Wilkins |
April 12, 2012
| Updated: April 12, 2012 11:39pm

Texas Republican Sen. John Cornyn gave his Stanford donation to charity.

Photo By John Jiles

A receiver says Rep. Kevin Brady, of The Woodlands, has yet to repay.

Photo By Dave Ryan

U.S. Sen. Kay Bailey Hutchison gave her Stanford donation to charity.

Photo By Steve Campbell/Chronicle file

A receiver says Pete Olson, of Sugar Land, also has yet to repay.

WASHINGTON - Before his arrest, convicted swindler R. Allen Stanford was a prodigious political donor, a billionaire financier who along with his employees had given nearly $2.4 million to both Democrats and Republicans since 2001.

But Stanford's victims and the court-appointed receiver assigned to recover money stolen by Stanford are demanding politicians return the money to them - claiming the funds are ill-gotten gains in the form of campaign contributions.

The result has been a complex legal battle that pits politicians - including eight members of the Texas congressional delegation - against some of their constituents in an unusual matchup that has both sides crying foul.

"At every turn, someone is there to in some way limit or reduce the recovery for Stanford victims," said Angela Shaw of Dallas, who lost $2 million. "There are so many facts of this case, and none are working to the advantage of the victim."

Stanford was convicted on 13 counts of fraud earlier this year after running a $7 billion Ponzi scheme for decades.

As is the custom when politicians discover that a donor is enmeshed in scandal, many of the recipients - such as Texas Republican Sens. Kay Bailey Hutchison and John Cornyn - gave their Stanford donations to charity.

The court-appointed receiver working to get back the funds has sent letters to all recipients of political contributions from Stanford and his company's political action committee asking them to return the donations. The list of those yet to repay, according to the receiver, includes five national party committees, one Texas-based PAC, both Texas senators and six Texas representatives - Pete Sessions of Dallas, Pete Olson of Sugar Land, Kevin Brady of The Woodlands, Lamar Smith of San Antonio, Sam Johnson of Plano and Joe Barton of Ennis.

5 committees sued

The situation has gotten so contentious that the receiver, Ralph S. Janvey, sued five political party committees, both Democratic and Republican, to recover Stanford's contributions plus legal fees. The committees allege that the fees are too high.

"Unfortunately, those efforts were rejected by attorneys for the receiver who appear more focused on lining their own pockets than ensuring Allen Stanford's victims receive some justice," said Walsh.

Request 'appropriate'

Kevin Sadler, the lead lawyer for the court-appointed receiver working to get back the funds, said the receiver believes the request is "appropriate given the size, the scope and the complexity and the difficulty of work he and his professional team is undertaking."

The battle has left everyone dissatisfied.

"(The fees) have been excessive, I believe," the Stanford victim said. "But the court has said they've been fair."

All but Brady and Olson said they had made charitable donations equal to the amounts Stanford gave to their campaigns, and Olson's office maintains that he also returned all of Stanford's contributions to the receiver.

Sadler said lawmakers giving the money to charity was a "meaningless act."

"The fact they gave money away to some other charity doesn't mean they're not in possession of money that doesn't belong to them," Sadler said.

Melanie Sloan, director of Citizens for Responsibility and Ethics, a Washington-based watchdog group, said the case is a complicated for politicians.

"I think they thought they would be doing the right thing (by donating to charity)," Sloan said. "It doesn't matter what's correct or not. It matters what the political ads will say."

None of the representatives and senators responded to questions about why they chose to give the funds to charity rather than the victims, with the exception of Cornyn, who said it was his standard procedure in these instances to donate the funds to charity.

"It's personally kind of insensitive," Shaw said. "If you are going to return money, give it to the victims that it came from. If we had wanted to make a donation to charity, we would have done that."

Transfer a tough sell

For Shaw, where the money goes matters a lot. She said she has visited Washington between 30 and 40 times in the last three years and members from the victim's coalition have visited at least 100 members of Congress. Shaw said many lawmakers have supported the group's case.

But it's been a tougher sell to get lawmakers to transfer the donations to the victims' fund. According to the receiver, four Texas lawmakers - Rep. Randy Neugebauer, R-Lubbock; Rep. Lloyd Doggett, D-Austin; Rep. Mike McCaul, R-Austin; and Rep. Charles A. Gonzalez, D-San Antonio - have sent the receiver donations given by Stanford.

Olson, a Republican from Sugar Land, has paid back $3,300 of the $5,300 he received from Stanford, according to the receiver. However, an Olson spokesperson said the $3,300 was all he and his campaign were given by Stanford.

A Texas district court determined last June that the committees have to repay all contributions plus attorney's fees, but the committees have appealed the decision. It will be argued in appeals circuit court May 1.